Rumblings about transparency

For people interested in greater transparency, the last seven days have been filled with little rumbles that could turn into earthquakes.

The biggest deal was an announcement by the Green Party over the weekend that its MPs would stop accepting corporate hospitality, and its ministers would soon publish the diaries that detail who they have been meeting.

Both are extremely welcome announcements, especially the latter, because it helps us start to get to grips with the extent of lobbying in New Zealand. People are allowed to lobby politicians, of course, but problems arise when some people can afford much more lobbying, and therefore much more influence, than others. So it needs to be out in the open, and the Greens announcement is a step in the right direction.

Ultimately, though, I think a bigger shakeup is needed, and New Zealand should emulate Ireland’s online register of lobbying. This requires all lobbyists to disclose, every quarter, their meetings with ministers, MPs and senior civil servants, and the issue discussed.

New Zealand also has a major problem with the ‘revolving door’ of people leaving Parliament to work for lobbying firms, most recently the Prime Minister’s temporary chief of staff. Information that should be used only for the general public good gets appropriated for private ends, and there is a high chance that officials will bias decisions towards companies in the hopes of getting lucrative employment later on. As I’ve previously suggested, New Zealand should follow Canada and have a five-year ‘cooling off’ period for everyone leaving government.

Also in the last week, we have seen Parliament announce that citizens can now start and organise petitions online – a welcome reform that was underway under the previous government, but also something very basic in the 21st century. I think the petition system is fundamentally inadequate, because nothing is guaranteed to happen – not even a proper response to the issues raised – even if the number of signatures is high.

As I set out in my report last year, Bridges Both Ways, I would like there to be a website where anyone can suggest a law to go before Parliament, and if it gets enough signatures (50,000, say) it gets treated like a Member’s Bill and has to be debated and voted on – even if it is ultimately rejected – in Parliament. But again, some small rumbles of this kind are hopefully a prelude to a bigger shakeup.

Media’s disclosure of interests under spotlight

One fascinating development this week has seen the long-running concerns about undisclosed interests in the media finally burst out into the open.

First, it was revealed that a commentator on Radio New Zealand, supposedly an ‘independent’ PR consultant, was actually working in the Prime Minister’s office. Then, even more strikingly, the NBR column of prominent lobbyist Matthew Hooton was abruptly cancelled. When asked why, NBR publisher Todd Scott told journalist John Drinnan: “It’s time to draw clear lines, mainstream media is murky enough. We need to respect the power we yield [sic] and protect its abuse by those who are funded to sell a point of view.” (Hooton has subsequently been hired to write for the Herald.)

For a long time, there have been concerns that the commercial interests of people writing in the media have not been adequately disclosed. This is particularly true now that there are probably fewer ‘pure’ freelance journalists and writers operating.

In the new gig economy, many people combine writing with PR and other paid work for companies and other organisations, even if they would rather just be straight writers. That heightens the need for strong and clear declarations of their interests, so that the public can see what might be influencing them and supposedly public spirited arguments cannot be used to disguise the promotion of private interests.

These are complex issues, affecting many people, myself included, as I have previously had one of those gig economy type existences. I’ve always declared possible conflicts on my own personal website, but I think there needs to be more rigorous disclosure, and for it to happen on actual pieces of writing, not just on personal websites that the average person may or may not read.

That would ideally require some kind of coordinated disclosure standards across the media – something I think we will hear more about in future.

Some thoughts on Shaw’s State of the Nation speech

I was at James Shaw’s agenda-setting speech yesterday. Overall I thought it was a good, ambitious, far-reaching speech, and it was pleasing to hear a party leader who clearly reads and thinks, and who has a sense that we’re living at a time of the end of one global political settlement and the birth of another, as yet unformed one.

What I thought was missing was a connection between the overarching problem – the failures of the existing settlement – and the solution, which apparently is environmental economics. The problems we face have been created on all sorts of levels: ethics, the desire for excessive consumerism, personal motivations, ideas about how large the public realm can be, the role of government, and so on. You can’t replace all of that with environmental economics; you need some wider belief system, and I didn’t feel that was sketched out.

Despite some references to Kate Raworth’s doughnut economics (which I think is a useful visualisation but not as revolutionary as has been touted), I wasn’t sure that the connection between economics and everything else was clear, nor what the structuring principles of environmental economics would be. Do all companies need to be social enterprises, or cooperatives? Do we have to be agnostic about growth, or push for radical decoupling of growth and emissions? If one broadens indicators of success away from GDP, will changes automatically flow, or do the ethical challenges mentioned above also have to be confronted? Maybe I’m being too much of a policy wonk here, but I would have liked to see those issues at least sketched out.

Separately, it was good to see all the Green MPs also speak briefly about their priorities, and when you added them up – real progress on equal pay, a big shift to environmentally friendly transport, aiming for zero waste – you could see that the change Shaw was talking about was actually underway.

It was interesting to hear, though, Shaw say quite plainly to Green activists that they need to understand how much the Greens “need” Labour and New Zealand First, and insisting that he wants to “call everyone in not call everyone out”. Of course he’s right that one should often look for compromise where needed, and seek win-win situations. But politics is often also fundamentally about winners and losers: few policies are universally popular. Adapting to climate change will create some massive losers, particularly among the fossil fuel companies. And the priorities of some other Green MPs, such as Jan Logie’s desire to overhaul the welfare system, will be extremely unpopular in some parts, both with the Greens’ coalition partners and more broadly. In short I suspect there needs to be both calling out and calling in, which is a very difficult balancing act for the Greens, and is as much about tone as the content of what’s said. But then that won’t come as a surprise to anybody.

Does the new government mean open government?

In one of her first major interviews after becoming prime minister, Jacinda Ardern told Checkpoint that she wanted not just to do more with government but also change the way it operated. “I also want this government to feel different, I want people to feel that it’s open, that it’s listening and that it’s going to bring kindness back.”

This sounds very promising. It is, though, the sort of thing that new leaders often say but which is much harder to sustain when they are under full attack from an Opposition searching for dirt, embarrassing official information act requests are landing, and so on.

So will it be sustained? The agreements that Labour has signed with the other parties provide some good, if vague indications that it might.

The coalition agreement with New Zealand First notes a general desire for “building public confidence in, and engagement with Parliament, and Government and the electoral system as a whole. We are committed to an independent and robust public service.”

Slightly more specifically, it promises an “independent review of the integrity of electoral processes and enrolments” and a review of “the processes of Parliament to reflect an MMP environment”.

Meanwhile the confidence and supply agreement with the Greens has a more intellectually rigorous, if equally unspecific, commitment to “strengthen New Zealand’s democracy by increasing public participation, openness, and transparency around official information”.

I’m not sure what the first New Zealand First commitment refers to, since the integrity of our electoral system is regarded as being pretty strong. On the second, Parliament’s processes definitely need overhauling, and I have set out ideas for that elsewhere, but I’m not sure they are MMP-specific, rather something that all Western parliaments need to do to bring themselves into the 21st century: allowing more direct input from citizens, making better use of digital technology, finding ways to deepen scrutiny and deliberation, and so on. So it’s hard to know what will come out of that.

As for the Greens, they have put forward various proposals for open government in the past, so I would expect them to keep pushing things like bringing the Offices of Parliament under the Official Information Act, putting annual limits on donations to political parties (not that that is likely to progress), creating a register of lobbyists, and so on.

At this stage it’s all a guessing game, but in general I would expect movement on some of the more technical elements, especially around the OIA; the real question is whether anything more substantive will change. We’ll just have to wait and see.

Newsroom: A big idea 5 — ‘Electoral funding vouchers’

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Max Rashbrooke is a senior associate at Victoria University of Wellington’s Institute for Governance and Policy Studies, and has recently published the report Bridges Both Ways: Transforming the openness of New Zealand government. This article sets out the last of the five ‘big ideas’ drawn from the report.

One of the most long-standing concerns about democracy is that it can be distorted by money. Because running political parties and election campaigns is expensive, parties are reliant on private donors. That raises the prospect that, to keep those donors happy, parties will shape policies towards their interests, meaning that those who can afford to donate to parties will have more influence over politics than others – a fundamental contradiction of the ideals of democracy.

Is this concern real? It certainly is in the US: academics such as Martin Gilens have shown that the way American politicians vote is strongly connected to what their wealthy constituents want to happen, while bearing almost no relationship to the desires of their poorer or even middle-income voters. In the UK, there is a clear link between donating to political parties and receiving political honours.

In New Zealand, we don’t have such detailed evidence. But we know that both the main political parties openly sell access to politicians, National through its Cabinet Club and Labour through its President’s Club. Whether that access turns into influence is another question. But we have seen enough scandals involving favours given to wealthy donors, by both main parties, to think that something similar is happening.

And the amounts given by wealthy people are significant, in the New Zealand context. Between 2011 and 2014, donations over $30,000 totalled $12 million, while total advertising spending during the 2014 campaign was under $9 million. Donations from wealthy people are clearly large enough to influence campaigning.

For this reason, political donations are consistently one of the issues singled out by international bodies concerned about the integrity of New Zealand’s democracy. There are no limits on how much anyone can give a political party, and relatively little transparency: you don’t have to put your name on a donation unless you give over $15,000. This is a much more lax regime than operates in other countries.

The most modest response to the above concerns would be greater transparency: ensuring that donors were named if they gave more than, say, $1500. But that won’t really resolve the issues. Often, transparency just tells you how bad the problem is, rather than doing anything about it.

An alternative would be to increase government funding but also, crucially, to democratise it. This could be done through the government’s giving every citizen a small amount of money – an ‘electoral funding voucher’ – to give to the political party of their choice, once every electoral cycle.

More far-reaching reform of political donations would have two elements: a very strong cap on private donations, and either democratising or matching the public funding of parties.

On the first point, individuals could be limited to giving only small amounts, say, $1500 a year to any political party and $1500 to any candidate, to minimise inequality of influence. This would put New Zealand in line with Canada’s cap on annual donations, currently set at C$1550. Such caps are common in other countries, including Japan, France, Spain and Ireland.

Limiting donations in this way would cut party funding by around $20 million over three years. The most obvious way to address this shortfall would be to increase government funding of political parties, which is currently around $49 million over three years. And indeed many other countries provide extensive public subsidies, including Australia, Canada, Germany, Ireland, France and Sweden – sometimes as much as 80 percent of party revenues.

But this can be unpopular, and creates few incentives for parties to engage with the public. An alternative would be to increase government funding but also, crucially, to democratise it. This could be done through the government’s giving every citizen a small amount of money – an ‘electoral funding voucher’ – to give to the political party of their choice, once every electoral cycle. This could create a strong incentive for parties to engage with the public, while spreading influence equally. Such a scheme is being trialled in the US city of Seattle.

In New Zealand, the funding thus handed out would be the $49 million in existing government funding combined with an extra $20 million to make up the private donation shortfall: a total of $69 million per three-year electoral cycle, which would work out as an electoral voucher of around $20 per adult.

People on the electoral roll could be sent an email, once every three years, with links to simple online donation forms for each registered party, and a unique random number to identify their voucher and prevent fraud. Non-online options would also be needed, especially for disadvantaged communities. Unused vouchers would be allocated to parties based on their number of MPs and other criteria, and parties could be allocated minimal amounts at the start of each Parliament, to ensure some security of income. Spending another $7 million a year this way might be publicly unpopular, but it would be a small amount compared to the government’s $93 billion annual spending, and certainly less than the (three-year) $35 million cost of running an election.

If the voucher system were deemed too complex, another way to partially democratise funding would be for the government to match amounts given by members of the public, up to the above limit of $1500. Either way, the point is to ensure that influence over political parties is, as much as possible, spread evenly among citizens, in line with the long-standing ideals that guide our democracy.

Will Budget 2017 really lift 50,000 children out of poverty?

One item in May’s Budget that slipped through without much discussion was the claim that the changes to income tax and Working for Families payments would lift 50,000 children out of poverty. At the time I was sceptical, and information released by the Treasury last month – some to the whole public and some to me under the Official Information Act – paints a mixed picture.

The documents show that the Treasury’s modelling predicts that substantial numbers will be lifted out of poverty. One key measure of poverty is how many people are living on less than half of the typical (median) income, for a household of their size. The Treasury modelling predicts that the changes will lift 22,000 households and 49,000 children over that line. That represents around 30% of all the children currently under the line (although Ministry of Social Development officials warned against treating the percentage figures as highly accurate), leaving another 109,000 children still in poverty, on that measure.

A more demanding measure is that people need a bit more – 60% of average income – to be out of poverty. (I tend to think that is the most useful poverty measure, because surveys of people’s actual budgets indicate that is about how much they need, but the 50% line is widely used internationally.) The Treasury modelling indicates 16,000 households, including 36,000 children, will be lifted over that line.

The chart below, although complex, essentially shows that there is a large group of households on low incomes (the peak of the solid line just to the left of the dotted lines representing the 50% and 60% poverty thresholds) who will get thousands of dollars extra a year (the black bars under that peak), pushing them over the poverty line.

While that doesn’t do enough to address the situation of the very poorest, it is obviously welcome, assuming the modelling is correct. What is puzzling is why the government didn’t make more fuss about that, given that child poverty is a major political issue and ministers are eager to look like they care on social issues.

One clue may come in the e-mail between Treasury analysts released to me under the OIA, in which one notes, “The level figures for number of households below the income threshold are likely to be highly contentious as they rely on modelling assumptions.” It is not clear what modelling assumptions were made, but unless I’ve badly misunderstood the figures, they represent how much money households will have in their pocket before they have to pay housing costs.

That is significant, because, as we all know, housing costs are spiralling at the moment, including for renters, which many poor families are. There is so little housing available that there is effectively not much competition among landlords: people are desperate for places, and take pretty much whatever they can get. That makes it very easy for landlords to raise rents to the highest amount they think their tenants can sustain.

That, in turn, implies that although more money is going into poor families’ pockets, there may be a lot of what is called ‘landlord capture’: landlords may capture much or most of that increased income by raising rents. Since the changes in income were heavily publicised in the Budget, landlords will have a good idea of how much they can do that.

As far as I know, Treasury doesn’t know how great that effect will be, and so they don’t know if all those households will actually be lifted out of poverty once housing costs are taken into account. It would be very interesting to try to estimate the scale of landlord capture in New Zealand, but until we can, I think we have to treat the 50,000 children figure with some scepticism – and assume that the above concerns may be part of the reason that ministers aren’t making as much of a song and dance about the claim as they would otherwise have done.

Newsroom: A big idea 4 — ‘A national holiday to talk politics’

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Max Rashbrooke is a research associate at Victoria University of Wellington’s Institute for Governance and Policy Studies, and has recently published the report Bridges Both Ways: Transforming the openness of New Zealand government. This article sets out the fourth of five ‘big ideas’ drawn from the report, with the final one to follow shortly.

Many people want to know more about what’s going on in politics, take part in political discussions and vote in a more informed way – but lack the time, energy and space for it. And that’s understandable. With a record number of families having both parents in work, and New Zealand having long working hours in general, it isn’t easy to carve out time to think about the issues.

It’s also not something that everyone can do without a supportive environment. In the past many people were members of groups – such as churches or trade unions – where politics were regularly discussed. Those groups provided a bridge between individuals and the often complex and confusing world of current events. They created a space in which people could see politics being ‘done’ and in which they could take their first steps in that arena – but have significantly stopped performing that role.

All of which means we should think about ways to create new spaces and opportunities for people to discuss the big issues. One idea for doing that has been advocated for many years by two American scholars, Bruce Ackerman and James Fishkin. They call it Deliberation Day and the idea is that around two to three months before every general election, there could be a public holiday dedicated to discussing politics and the upcoming vote.

A New Zealand version, which we might call a Kōrero Politics Day, would ideally be marked by community events and working bees, town hall meetings, festivals that combine music and politics, and other gatherings designed to foster discussion. On the model of the annual Neighbours Day Aotearoa, every community could be given a small amount of funding to put on an event that would bring people together to discuss the issues. The idea would be to make talking about politics interesting or even, dare one say it, fun. Working it in around community events would also help make it more natural – a chance to chat while doing something together, rather than an excessively formal ‘debate’.

While political participation on the day could not, of course, be enforced – no more than people can be forced to think about the Treaty on Waitangi Day – it is likely that a well-designed set of events, strong institutional support and public pressure would help create a culture of engagement.

All of this would underline the importance of politics, give people time and space to think about issues, and encourage a more reflective citizenship – and therefore better political campaigning. The kind of campaigning that parties do typically responds to where they think the voters are at and how deeply they engage with the issues. Better informed voters would encourage campaigning that focuses more on the issues and less on the substance.

While political participation on the day could not, of course, be enforced – no more than people can be forced to think about the Treaty on Waitangi Day – it is likely that a well-designed set of events, strong institutional support and public pressure would help create a culture of engagement. As Ackerman and Fishkin have argued, evidence from deliberation-based events shows that “the public has the capacity to deal with complex public issues; the difficulty is that it normally lacks an institutional context that will effectively motivate it to do so”.

Since New Zealand elections typically happen in spring, a holiday a few months earlier would provide a much-needed break in the middle of winter. The Kōrero Politics Day could, as above, take place only in election years, but could also happen every year to emphasise all the important political discussions that go on outside of election campaigns.

An extra holiday would of course increase costs for business. But it would only bring New Zealand up to the G20 average of 12 statutory holidays a year, well below countries such as Finland on 15, so it doesn’t seem an excessive burden. And New Zealanders already work long hours: the main cause of the country’s relatively poor economic performance is not time away from work but a failure to be efficient and productive while people are at work.

An alternative with lower business costs would be to designate a Saturday or Sunday as the Kōrero Politics Day – but that might be underselling the importance of politics. New Zealanders often begrudge spending money on their democracy, but it’s actually one of the key underpinnings of our lives, and should be invested in. We don’t expect houses to last well if they’re built cheaply. So why should we expect our democracy to work well if we’re not willing to spend some money on it? A day for talking about politics would symbolise our commitment to this fundamental aspect of our lives – and go some way towards improving the standard of democratic debate in this country.

The state of poverty and inequality in 2017

Today the Ministry of Social Development published its 270-page Household Incomes Report, the gold standard annual record of poverty and inequality in New Zealand. So what did it tell us? Below are four key conclusions I have drawn, based on pulling out a few key figures and graphs. The discussion is slightly technical, but as little as is humanly possible.

1. Poverty remains stable since the Global Financial Crisis

There are lots of different ways of measuring poverty, and they tell slightly different stories. But overall poverty seems to have been relatively stable since the Global Financial Crisis. For instance, the proportion of households living on less than half the national average (for households their size) was 9% in 2009, and 10% in 2016. The proportion of households living on less than 60% of the national average was 18% in 2009 and 18% in 2016.

Those figures are before housing costs are deducted. After housing costs are deducted, 14% of New Zealanders were on less than half the average income both in 2009 and 2016. Some 19% were on less than 60% of average income in 2009, and 20% in 2016.

For children, it is roughly the same story. Before housing costs, 13% of children were in households with less than half the average income both in 2009 and 2016. The equivalent figure for households with less than 60% of average income is 20-21% in both years.

After housing costs, 20% of children were in households with less than 50% of average income in 2009, and 19% in 2016. The equivalent figure for households on less than 60% of the average is 27% in 2009 and 25% today.

The stability of these poverty numbers reflects the fact that income increases for the poorest fifth of the country, at around 12% since 2009, are roughly the same as those for middle New Zealanders, so the poor are pretty well ‘keeping pace’. That also means that, relative to the poverty line ‘fixed’ in 2007, there are fewer poor households and poor children. (Since, however, I think the most important poverty measures are the fully relative ones that shift as average incomes increase, I have concentrated on those.)

The exception to the above story is for the more extreme poverty – children in households with less than 40% of average income, after housing costs. Those numbers have increased from 10-11% in 2008/09 to 13% in 2016 – an increase in actual numbers from 120,000 in 2009 to 140,000 in 2016 (and that figure had gone as low as 105,000 in 2008).

This may reflect the severity of the housing crisis for the poorest. Data reported in the media recently (not from the Report) also show increases in homelessness, rough sleepers, people using food banks, and so on.

In contrast, when it comes to material hardship measures based on asking families what they can’t afford, the rate for children in material hardship has fallen from 16% in 2009 to 12% in 2016. That covers the households missing out on 7/17 key items, such as being able to afford decent clothing. But the most severe rate of material hardship (missing out on 9/17 items) has also fallen, from 9% to 6%.

What is clear either way is that, despite some claims to the contrary, overall poverty numbers have not increased under the current government. But at the same time, our high levels of poverty (twice those of some European countries, especially for children) have not been reduced, and indeed, worryingly, seem to be becoming ‘baked in’ and normalised.

On an unrelated note, it remains the case that around 4 in 10 poor children are from households that have not had anyone on a benefit in the last 12 months. Work is clearly not sufficient for escaping poverty, despite the popularity of that idea.

2. Housing is important – up to a point

Housing is clearly a major concern at present in New Zealand. The Report has many figures on this, but perhaps the most striking is that the poorest fifth of the population are paying on average half their income (51%) in housing costs. The housing situation is obviously dire and needs urgent action, whatever one’s views about the best way to do that.

However, one must be careful about asserting that housing is the dominant factor in inequality. It is true that after-housing-costs measures of inequality have increased more than others since the GFC, and housing is obviously an important lens through which to see inequality at present.

But 18% of the population are poor (living on under 60% of average income) even before housing costs are taken into account (as above), and that figure increases only a further two percentage points, to 20%, after housing costs. My own rough estimate (set out here) is that, of the overall increase in inequality since the mid-1980s, only one-tenth can be attributed to increased housing costs.

Clearly, while housing matters, it is hardly the sole or even the main cause of inequality. Other issues – such as jobs, training, wages, benefits and taxes – are equally or more important individually, and clearly more important as a whole.

3. Inequality is up slightly since the GFC

The figures in the Report continue the story of recent years. On almost all the measures, one can see a slight rise in income inequality under the current government, enough to cancel out the slight fall under the previous government. The Gini coefficient graph (where 0 would imply income being equally shared and 100 would imply all income being held by one person) shows this clearly.

Because the rise under National cancels out the fall under Labour, New Zealand’s current level of inequality is roughly equivalent to its early-2000s level. (Describing it as ‘stable’, however, can be misleading, since policy changes, especially Working for Families, have both reduced and increased it in that time.)

Income gains have been reasonably even across the spectrum since the GFC – between 10% and 15% for most groups, with only slightly higher rates for the richest groups contributing to slightly increased inequality. Again, this is in contrast to some of the narratives around ‘skyrocketing’ inequality under the current government. Again, however, there is no progress on reducing inequality, and indeed the progress made under the previous government has been lost.

It is worth remembering that New Zealand experienced the developed world’s biggest increase in income inequality from the mid-1980s to the mid-2000s. Since 1984, incomes have increased just 29% (after inflation) for the poorest tenth and 38% for the average person, but 96% for the richest tenth. Nothing has happened since the big rise in the 1980s and 1990s to rebalance the income distribution.

4. All these numbers need to be seen in the longer context

Some people will conclude from the above figures, especially those showing inequality still at its early-2000s level, that there is no issue (except the housing crisis). However, there is an equally good argument that the long-standing nature of these problems actually makes them worse.

Poverty has profound impacts on individuals, and inequality tends to damage the social fabric, increasing the social ‘distance’ between people and thus diminishing trust, cohesion, and so on. The fact that those problems have been left to compound for the last 20 years – and in particular have major effects on children that will continue throughout their life – arguably means they are worse than if they had just sprung up yesterday.

Newsroom: A big idea 3 — Let citizens draw up DIY Budgets

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Max Rashbrooke is a research associate at Victoria University of Wellington’s Institute for Governance and Policy Studies, and has recently published the report Bridges Both Ways: Transforming the openness of New Zealand government. This article sets out the third of five ‘big ideas’ drawn from the report, with the rest to follow in subsequent weeks.

Number three: A citizen-generated Budget

The Budget is the Government’s most important announcement every year. Which makes it our most important announcement as a public, as a group of citizens, since government is ideally nothing more than us acting collectively under a different name.

And yet we have very little say over it. Up to a point, that’s normal: when we elect politicians, we delegate certain decisions to them. But wherever possible, we could still be looking to take back some of those decisions for ourselves, or at least make our feelings known more clearly. We are also falling behind other countries. On the international Open Budget Survey, New Zealand scores well for publishing information about the Budget, but pretty badly – just 65 out of 100 – when it comes to allowing public participation.

One innovative way to change that would be to have an annual Budget drawn up by citizens – a DIY Budget, let’s call it – that would show the Government how people want their money to be spent, and force ministers to justify their decisions against it.

It would work using the internationally-recognised practice of a citizens’ assembly, in which a group of, say, 100 ordinary people, selected to be representative of the population as a whole by age, gender and so on, would be asked to gather over a couple of weekends, with payment for their time. The assembly would be asked to draw up a rough annual Budget, indicating their spending priorities – such as whether they want to see more or less spending in broadly defined categories such as health, education and defence – and what tax increases or reductions (again, at a broad level) would be needed in consequence. The assembly members wouldn’t have to get into the nitty-gritty of every Budget line and allocation, but they would have to make high-level calls about which spending areas are most important.

Give people enough time, and expert advice, and they will amaze you with the quality of the decisions they take.

To help them work through what would still be a reasonably difficult task, they would need to have available the best expert advice from political scientists, economists and financial modellers – people who know intimately how the system works, how spending decisions would have to be traded off, and the options for raising or cutting taxes. The DIY Budget would be published at the start of each year, to inform official Budget decisions and to force the Government to justify itself when its Budget diverges from the citizens’ version.

Think this all sounds far too complex and pointy-headed for a bunch of ordinary people? In fact, citizens’ assemblies overseas have handled much more complex (and, frankly, boring) issues, such as the design of new electoral and local government systems. Just across the Tasman, a 2015 citizens’ assembly of 43 Melbourne residents and business owners drew up a clear and rigorous 10-year financial plan for the city’s council. The plan was applauded for making a series of tough calls on potential new projects, the sale or retention of public assets, and the tax take needed in consequence. In other words: give people enough time, and expert advice, and they will amaze you with the quality of the decisions they take.

Like the earlier proposal in this series for citizens-generated laws, this idea wouldn’t hand over power to citizens in an uncontrolled way. The Government would still set the actual Budget, as indeed it must, given the way that document shapes all the rest of its agenda. But it would make the desires of citizens much, much more visible and clearer than they are now, and would significantly raise the bar (and the level of public embarrassment) for ministers who wanted to do something different.

The other advantage of this proposal is that, unlike in a referendum where people can vote on an issue in isolation, these kinds of assemblies force people to do the real work of politics, which almost always involves trade-offs: more money for something means less money for something else, or tax increases. The DIY Budget would also force people to put their money where their mouth is. In surveys, people always say they would like more spending on health, education, anything you care to name, but the suspicion is they aren’t actually willing to pay the tax needed to fund those increases. A DIY Budget would settle that question.

Newsroom: A big idea 2 — Let public vote on council budgets

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Max Rashbrooke is a research associate at Victoria University of Wellington’s Institute for Governance and Policy Studies, and has just published the report Bridges Both Ways: Transforming the openness of New Zealand government. This article sets out the second of five ‘big ideas’ drawn from the report, with the rest to follow in subsequent weeks.

Number two: Direct voting on council budgets

Imagine if you could have a direct say over how your council spends its money – if you could get it to build that children’s playground your neighbourhood needs, or install lighting to make your area safer.

As it stands, you can put in a submission on your local council’s annual plan – if you get the chance – or you can lobby your ward councilor. But whatever voice you have in that process is one step removed from where the decisions get made.

Imagine if, instead, local councils put up 10 percent or more of their annual budget to be decided directly by you and your fellow members of the public. It’s a model that has worked well overseas, notably in Brazilian cities, and often goes under the slightly clunky title of participatory budgeting.

It’s not easy or cheap, of course. (But then why should democracy be cheap, when it’s one of the key foundations of our lives?) It starts with council officers going round their area, block by block, ward by ward, letting people know there is a big chunk of the annual budget up for grabs.

This culminates in a big end-of-year town hall meeting, where residents (or temporary representatives appointed for the occasion) vote to allocate the funds. The great thing about this process is that, unlike referenda where people can vote on issues in isolation, it forces citizens to make trade-offs. If they want more money for library upgrades, there will be less for swimming pools.

When these schemes have been used overseas, they’ve had proven benefits. For a start they get lots of people involved in politics – including people who’ve never been involved before, especially those living in poverty, although the poorest are often still not engaged.

In the Brazilian city of Porto Allegre, up to 40,000 people have been involved in the process each year. And as a result, the spread and quality of public services has increased: in particular, public services have been extended to cover those previously excluded from their benefits. Unsurprisingly, what councils deliver also better reflects what their citizens want.

These methods work best face-to-face – a lot of their magic resides in the interactions of citizens, in the moments when they confront each other’s views and have to justify their own. But that labour-intensive process can be supplemented by less demanding schemes – such as creating longlists of potential building projects for the public to rank online.

Why should democracy be cheap, when it’s one of the key foundations of our lives?

As with most schemes designed to create more ‘everyday democracy’, these direct budgeting ideas don’t aim to write local councillors out of the picture. For many reasons they will always remain important, and will have to make most key decisions. Direct voting on budgets is just designed to shift the balance a little in favour of citizens. And the evidence from overseas is that people are more than up to the task, if only they get the opportunity.

One of the big issues this idea would face in New Zealand is the limited power of our local councils. Because we have an exceptionally centralised form of government, our local councils don’t do many of the things – like running schools and health services – that their overseas counterparts do.

That means a lot of council spending goes on things like wastewater services where there isn’t much discretion, or a public interest, in shaping them. Those services, to a large extent, are what they are.

So direct voting on budgets would have to be adapted to local circumstances. It might be that it works better with those that, like Wellington City Council, have unusually large budgets and fund a wide range of projects. Or it might work better in smaller councils that are more flexible and naturally open to their constituents.

Or it could be that, instead of holding big town hall meetings, councils get citizens involved in different ways – for instance, by letting community boards or other organisations have more control over specific projects, such as upgrades to their local shopping area.

A final alternative: instead of accepting that councils have few powers, we could argue that a move towards participatory budgeting could be the spur for something that probably should happen anyway – the shifting of some services from central government to local councils that arguably have a better idea of what their residents want.

Whatever happens, the basic point is that the more closely people can control certain (though not all) budget decisions, the better the quality of those decisions and, ultimately, the services that result. In an era where people expect more control over their lives and more transparency than ever before, it could be a sensible reform for government to make and thus ensure that it keeps up with citizens’ expectations.